The Basics
These are the most important factors. Adjust them to match your situation.
Mortgage Details
We model a constant interest rate for simplicity. Most UK mortgages fix for 2–5 years and are remortgaged or move to variable rates.
£30,000 based on property price. Higher deposits typically qualify for lower mortgage rates—consider adjusting the rate below for more realistic results.
See current rates for your scenario on MoneySavingExpert
Growth & Returns
Future growth rates significantly impact the outcome. These are hard to predict and vary by location.
Long-term average 3–4%. London historically higher but variable.
For equities, historical global markets have returned about 6–7% annually over long periods. For cash savings accounts, current UK rates are around 4–5%. Tax treatment configured in Investment Assumptions.
Rent increases tend to follow local supply/demand.
2% is Bank of England target. Used to show all values in today's money.
Buying Upfront Costs
One-time fees when purchasing a property. First-time buyers get stamp duty relief.
Eligible for stamp duty relief. In England, first-time buyers pay no stamp duty up to £300,000, with reduced rates up to £500,000. No relief above £500,000.
Solicitor fees including searches, Land Registry
Buyer Ongoing Costs
Recurring costs of property ownership. These costs continue throughout your ownership period.
£3,000/year. 1% is conservative; older properties may need 2%+
Set to £0 if included in service charge. Increases with inflation over time.
For leasehold properties. Typically covers building insurance, common area maintenance. Set to £0 for freehold properties. If unsure, £1,500 is a reasonable default for leasehold. Increases with inflation over time.
For leasehold properties. New leases since June 2022 have peppercorn (£0) ground rent. Increases with inflation over time.
Selling Costs
Fees incurred when selling at the end of your time horizon.
Estate agent fee + 20% VAT are applied to sale price.
Renting Costs
The deposit is refundable but has an opportunity cost while held.
£1,385. Refundable but has opportunity cost
Investment Assumptions
The renter invests money saved vs buying. ISA contributions are tax-free; overflow goes to a taxable account.
Tax-free investment allowance. Current UK limit is £20,000.
Tax-free capital gains allowance. Current UK limit is £3,000.
Sale gains above the annual exemption are taxed at 10% for basic-rate taxpayers or 20% for higher/additional-rate taxpayers.
Full Results
Buying saves you £55,559 over 10 years (in today's terms)
Renting makes sense if its benefits are worth more than £463/month to you.
| Category | Buy | Rent |
|---|---|---|
| Initial costs | £33,000 | £1,385 |
| Recurring costs | £198,387 | £149,039 |
| Property equity | £164,432 | — |
| Investment proceeds | — | £107,737 |
| Final wealth | £164,432 | £108,873 |